KCM Divided into Three Sections

4,000,000

4,500,000

5,000,000

5,500,000

Jan2012

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2013

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2014

Feb Mar Apr May

EXISTING Home Sales

NAR 6/2014

$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+

% Sales +/- -12% -5.1% 0.2% 0.3% 2.4% 5%

-12%

-5.1%

.2% .3% 2.4%

5%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

% Change in Sales From Last Year

by Price Range

NAR 6/13/2014

0%

5%

10%

15%

20%

25%

30%

35%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Percentage of Distressed

Property Sales

35%

11%

18%

NAR 6/2014

90

95

100

105

110

100 = Historically Healthy Level

NAR 6/2014

PENDING Home Sales

50.6 51.250 50.6

47.8

27.7

19.3

26.2

43.946.1

44.5

0

10

20

30

40

50

July 2013 August2013

Septembet2013

October2013

November2013

December2013

January2014

February2014

March 2014 April 2014 May 2014

Foot Traffic (indicator of future sales)

realtor.org

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of

their credit scores or in how much they have saved for

their down payment.

It’s that they think they’re not qualified or they think that

they don’t have a big enough down payment.”

Housing Wire Commenting on a Study by Nomura

The DOWN PAYMENT Biggest Misconception about Mortgages

39%

38%

42%

36%

37%

38%

39%

40%

41%

42%

All Respondents 25-29 Year Olds 30-34 Year Olds

Percentage of respondents to Zelman & Assoc survey who believe that you need a minimum of a 15% down payment to purchase a home.

Freddie Mac 6/2014

The DOWN PAYMENT According to Freddie Mac:

•A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”. •Freddie Mac's purchase of mortgages with down payments under 10 percent more than quadrupled between 2009 and 2013.

•More than one in five borrowers who took out conforming, conventional mortgages in 2014 put down 10 percent or less.

Freddie Mac 6/2014

Letting more consumers know how down payments are determined could bring

more qualified borrowers off the sidelines. Depending on their credit history and other

factors, many borrowers can expect to make a down payment of about 5 or 10

percent.

Christina BoyleFreddie Mac VP and Head of Single-Family

Sales & Relationship Management

3.25

3.5

3.75

4

4.25

4.5

4.75

Freddie Mac Actual Rates

January 2013 – July 2014

30 Year Fixed Rate Mortgages

Freddie Mac 6/2014

5.2

4.7

5.1

5.4

Freddie Mac Fannie Mae

MBA NAR

30 Year Fixed Rate Mortgages

Actual Rates January 2013 – June 2014

Projected Rates June 2014 – 2015 4Q

1/2013 6/2014 10/2015

Mortgage Rate Projections

Analyst Projected Rate 2015 3Q

Fannie Mae 4.6%

Freddie Mac 4.8%

Mortgage Bankers Assoc 5.1%

National Assoc of Realtors 5.3%6/2014

1/2013 6/2014

4.2

4.4

4.6

4.8

5

5.2

2014 3Q 2014 4Q 2015 1Q 2015 2Q 2015 3Q 2015 4Q

Freddie MacProjected Rates

June 2014 – 2015 4Q

Freddie Mac 6/2014

30 Year Fixed Rate Mortgages

Freddie Mac Rates January 2013 – June 2014

Date Mortgage Interest Rate* P&I**

Today $250,000 4.17% $1,218.17

July 2015 $260,000 4.8% $1,364.13

*Average Commitment Rate per Freddie Mac **Principal and Interest Payment

$145.42Difference in Monthly Payment

Monthly Annually Over 30 Years

$145.42 $1,745.04 $52,351

Date Mortgage Interest Rate* P&I**

Today $100,000 4.17% $487.27

July 2015 $104,000 4.8% $545.65

*Average Commitment Rate per Freddie Mac **Principal and Interest Payment

$58.38Difference in Monthly Payment

Monthly Annually Over 30 Years

$58.38 $700.56 $21,017

Date Mortgage Interest Rate* P&I**

Today $500,000 4.17% $2,436.34

July 2015 $520,000 4.8% $2,728.26

*Average Commitment Rate per Freddie Mac **Principal and Interest Payment

$291.92Difference in Monthly Payment

Monthly Annually Over 30 Years

$291.92 $3,503.04 $105,091

Date Mortgage Interest Rate* P&I**

Today $1,000,000 4.17% $4,872.68

July 2015 $1,040,000 4.8% $5,456.52

*Average Commitment Rate per Freddie Mac **Principal and Interest Payment

$583.84Difference in Monthly Payment

Monthly Annually Over 30 Years

$583.84 $7,006.08 $210,182

Decade Average Rate Payment

1970s 8.86% $1,589

1980s 12.7% $2,166

1990s 8.12% $1,484

2000s 6.29% $1,237

July 2014 4.17% $975The average 30-year fixed mortgage rates and the approximate payment for a $200,000 mortgage. Payments are principal & interest only, based on a $200,000 fully amortizing mortgage.All terms are assumed to be 30 years.

Freddie Mac 7/2014

Historic Mortgage Rates by Decade

PRICES

S&P Case-Shiller Home Price Indices

S&P Case Shiller 6/2014

Year-Over-Year

PRICECHANGES

CaseShiller

S&P Case Shiller 6/2014

The Impact of Monthly Housing Inventory on Home Prices

LESS THAN 6 MONTHS

BETWEEN6-7 MONTHS

GREATER THAN7 MONTHS

SELLERS MARKETHomes prices will appreciate

NEUTRAL MARKETHomes prices

will only appreciate with

inflation

BUYERS MARKETHomes prices will depreciate

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May

Months Inventory of HOMES FOR SALE

NAR 6/2014

4.0

4.5

5.0

5.5

6.0

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May

Months Inventory of HOMES FOR SALE

NAR 6/2014

4.95.0

5.2

5.75.6

4.0

4.5

5.0

5.5

6.0

Jan Feb Mar Apr May

Months Inventory of HOMES FOR SALE

NAR 6/2014

-24%

-20.8%

-16.8%

-14%-13%

-7.6%

-5%-6.2%

1.8% 0.9%

5%

1.6%

7.3%

5.3%

3.2%

6.5% 6%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan Feb March April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May

% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3% 5.3% 3.2% 6.5% 6%

NAR 6/2014

Year-over-Year Inventory Levels

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

New Home Sales2004-2014

Census Bureau 6/2014

Realtor Magazine 6/2014

67%

33%Purchasersbrought to builderby real estateagents

Purchasersbrought by othermeans

NEW HOME Sales

ResourcesSlide Slide Title Link

4,6,7,27,28,29,30

Existing Home Sales, Percentage of Distressed Property Sales, Pending Home Sales, Months Inventory of Homes for Sale, Year-over-Year Inventory Levels

http://www.realtor.org/

5 % Change in Sales from Last Yearhttp://economistsoutlook.blogs.realtor.org/2014/06/13/existing-home-sales-by-price-tier/#sf3291580

8 Foot Traffic https://magic.piktochart.com/output/2155255-foot-traffic-may-2014?sf3290807=1

9 Housing Wire Commentshttp://www.housingwire.com/blogs/1-rewired/post/30441-nomura-fear-is-keeping-demand-pent-up

10,11 The Down Payment, Christina Boyle Quotehttp://www.freddiemac.com/news/blog/christina_boyle/20140616_mortgage_down_payments.html

13 30 Year Fixed Rate Mortgages http://www.freddiemac.com/pmms

14, 1530 Year Fixed Rate Mortgages, Mortgage Rate Predictions

http://www.freddiemac.com/finance/pdf/June_2014_public_outlook.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/88467_.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_062414.pdf http://www.realtor.org/sites/default/files/reports/2014/embargoes/phs-06-30/forecast-07-2014-us-economic-outlook-06-30-2014.pdf

16 30 Year Fixed Mortgage Rates http://www.freddiemac.com/finance/pdf/June_2014_public_outlook.pdf

17 Historic Mortgage Rates by Decade http://www.freddiemac.com/blog/research_and_analysis/20140324_dirt_cheap_to_cheap.html

24,25 S&P Case-Shiller Home Price Indiceshttp://www.housingviews.com/wp-content/uploads/2014/06/CSHomePrice_Release_April2014-results.pdf

31 New Home Sales 2004-2014 http://www.usatoday.com/story/money/business/2014/06/24/may-new-home-sales/11304161/

KEEPINGCURRENTMATTERS.COM

ResourcesSlide Slide Title Link

32 New Home Sales 2013 and 2014 http://www.calculatedriskblog.com/2014/06/comments-on-housing-and-new-home-sales.html

33 New Home Saleshttp://realtormag.realtor.org/daily-news/2014/06/18/builders-turn-agents-in-finding-qualified-buyers#sf3351519

39-61 Reasons to Ownhttp://www.jchs.harvard.edu/research/publications/believing-homeownership-behavioral-drivers-housing-tenure-decisions

62 Seth Godin Quotehttp://sethgodin.typepad.com/seths_blog/2014/06/more-people-saying-less-and-a-few-people-saying-more.html

KEEPINGCURRENTMATTERS.COM

Webinar

LIVE WEBINARThursday, July 24th - 2PM EST

15 ‘MAJOR’ REASONS TO OWN A HOMEas per a survey by the Joint Center for Housing Studies at Harvard University

* the reasons are in no particular order

EXTRA SLIDESAlternate Versions of select “Reasons to Own” Graphics

It's much easier to spend a lot of time making your

microphone louder than it is working on making your

message more compelling.

Seth Godin